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Home My WebLink About2013-03-20 PACKET 04.F.REQUEST OF CITY COUNCIL ACTION COUNCIL AGENDA MEETING ITEM # �� DATE 3/20/13 ` . PREPARED BY Finance Robin Roland ORIGINATING DEPARTMENT DEPARTMENT HEAD ****�:�*�*�*:��*************************�***:�**** COUNCIL ACTION REQUEST To adopt the resolution to write off Cottage Grove EMS accounts receivable in the amount of $1,715,348. STAFF RECOMMENDATION To adopt the resolution to write off Cottage Grove EMS accounts receivable in the amount of $1,718,348. BUDGET IMPLICATION BUDGETED AMOUNT ACTUAL AMOUNT ADVISORY COMMISSION ACTION ❑ PLANNING ❑ PUBLIC SAFETY ❑ PUBLIC WORKS ❑ PARKS AND RECREATION ❑ HUMAN SERVICES/RIGHTS ❑ ECONOMIC DEV. AUTHORITY ❑ SUPPORTING DOCUMENTS I�: REVIEWED ❑ ❑ ❑ ❑ ❑ ❑ ❑ � MEMO/LETTER: � RESOLUTION: ❑ ORDINANCE: ❑ ENGINEERING RECOMMENDATION: ❑ LEGAL RECOMMENDATION: ❑ OTHER: APPROVED ❑ ❑ ❑ ❑ ❑ ❑ ❑ DENIED ❑ ❑ ❑ ❑ ❑ ❑ ❑ � ADMINISTRATORS COMMENTS: - � � f / �� l; � � � 1 - R_ ��- � � . � ity Administrator Date ***************�*****�**************:��*�*�**,�*�* COUNCIL ACTION TAKEN: ❑ APPROVED ❑ DENIED ❑ OTHER G:\finance\Council Items�2013\CC Action Form Ambulance write-offs.doc To: From: Date: Subject: Introduction City of Cottage Grove Finance Honorable Mayor and City Council Ryan Schroeder, City Administrator Robin Roland, Finance Director Brenda Malinowski, Assistant Finance Director `b�� March 13, 2013 Ambulance Write-offs �- • The Council is asked to consider approving a resolution to write off uncollectible ambulance accounts totaling $1,715,348. Discussion We are requesting to write-off $1,715,348 in ambulance charges. The write-offs are detailed below: Percentage Increase 2009 2010 2011 2012 ('11 to'12) Gross Revenues: 2,470,142 3,240,396 31.18% Write-off s: Medicare $641,497.90 $729,729.00 $857,857.00 $1,190,647.00 38.79% Medicaid 243,804.00 270,738.00 283,567.00 374,392.00 32.03% Worker's Comp. 4,878.61 2,306.49 5,184.00 7,231.00 39.49% Other Manadatory Adj 13,241.00 8,835.00 13,383.00 18,438.00 37.77% Bankruptc 2,126.00 322.00 33.00 3,479.00 10442.42% Closed by Collection 190,292.00 185,484.00 166,810.00 121,161.00 -27.37°/a Total Write-offs $1,095,839.51 $1,197,414.49 $1,326,834.00 $1,715,348.00 29.28% The write-offs shown above relate to multiple years of services provided because the timing of the write-offs each year varies by the type of call and whether there is mandatory assignment required. For example, the write-offs related to Medicare and Medicaid are for runs over the past 12 months because the amounts are collected shortly after the billing process starts. However, the write-offs for those accounts "closed by collection" are for runs that occurred over the past couple of years. For the first four types (Medicare through other mandatory adjustment) we are only allowed to collect a small government payment and a small co-payment from the patient for the call. The amounts provided through this arrangement are a fraction of our billing rate and is lower than our cost to provide the service. The "closed by collection" calls are for our remaining patients. These are amounts that the collection agency feels they no longer will be able to collect. This process takes over 12 months from the call date to run through the collection process. Currently if the calls are not paid within 120 days, they are sent to collection as well as placed in the State Revenue Recapture program for collection. The Medicare write-offs have increased since 2002 when Cottage Grove EMS was required to accept assignment for Medicare payments. Medicare / Medicaid continues to pay a predetermined dollar amount no matter what our rates are set at. The table below includes an example outlining the Medicare reimbursement amounts for the past six years. The table demonstrates that the reimbursement rate from the federal government is the same no matter what the total bill is. As our rates increase faster than the increase in the reimbursement amount, the write-off amounts will also increase. Type of Call 2007 2008 2009 2010 2011 2012 Cottage Grove BLS Rate $ 989.40 $ 1,104.00 $ 1,160.00 $ 1,230.00 $ 1,330.00 $ 1,440.00 Medicare Reimb 312.38 324.49 338.08 331.45 340.37 352.96 % Reimbursed 31.57% 29.39% 29.14% 26.95% 25.59% 24.51% ALS-1 Rate 1,282.73 1,368.00 1,430.00 1,520.00 1,640.00 1,770.00 Medicare Reimb 370.95 385.34 401.47 393.59 404.19 419.13 % Reimbursed 28.92% 28.17% 28.07% 25.89% 24.65% 23.68% ALS-2 Rate 1,429.85 1,563.00 1,650.00 1,750.00 1,890.00 2,040.00 Medicare Reimb 536.90 557.72 581.07 569.68 585.01 606.64 % Reimbursed 37.55% 35.68% 35.22% 32.55% 30.95% 29.74% Staff has tracked the revenue (charges) versus write-offs by each City for the past three years. Grey Cloud Township reimburses the City for their write-offs so these have not been included. 2012 has not been included because all the mandatory write- offs have not been accounted for as they are still working through the system. Cottage Grove Newport St. Paul Park Grey Cloud Out of Area Cottage Grove Newport St. Paul Park Grey Cloud Out of Area Cottage Grove Newport St. Paul Park Grey Cloud Out of Area 2009 Charges Write-offs $ 1,445,130 $ 705,716 255,620 156,272 370,550 233,078 9,290 - 14,130 3,662 2,094,720 1,098,728 2010 Charges Write-offs $ 1,603,506 $ 809,634 259,540 154,510 336, 820 199, 854 22,186 - 8,684 3,679 2,230,736 1,167,677 2011 Charges Write-offs $ 1,800,545 $ 917,939 259,665 175,038 398,100 234,794 4,112 - 7,732 4,604 2,470,154 1,332,375 W/O's as % W/O's as % W/O's as °/o 48.83% 61.13% 62.90% 0.00% 25.92% 52.45% 50.49% 59.53°/a 59.34% 0.00% 42.37% 52.34% 50.98% 67.41 % 58.98% 0.00% 59.54% In 2004 the City started placing delinquent patient ambulance accounts, if we have a social security number, in the State Revenue Recapture Program for collection. The City collects approximately $30,000 in payments through this program per year. This program is proving to be a cost effective way to collect delinquent accounts. Below is information on the write-off trend for the past several years as compared to the corresponding revenue by year; Revenue (billed charges) W rite-Offs Medicare Medicaid Worker's Comp/Other Mandatory Bankruptcy Uncontrollable Total Closed by Collection (Controllable) Total Write-Offs Prior Years C C 2009 2010 2011 2012 2,094,720 2,230,736 2,470,154 3,240,396 Totals 10,036,006 Written Off 2012 Written Off previously Total Write-offs Write-offs as °/o of Revenue Revenue Increase Uncontrollable Controllable Still Owing 660,085 738,752 873,419 1,072,221 269,671 244,910 298,011 331,037 15,997 11,804 16,081 23,681 1,117 1,338 217 1,957 946,870 996,804 1,187,728 1,428,896 158,435 183,550 146,315 24,000 1,105,305 1,180,354 1,334,043 1,452,896 3,344,477 1,143,629 67,563 4,629 4,560,298 512,300 5,072,598 -19,830 -7,863 -20,123 310,268 1,452,896 1,715,348 0 1,113,168 1,200,477 1,023,775 0 3,337,420 -19,830 1,105,305 1,180,354 1,334,043 1,452,896 5,052,768 17.61 % 6.49% 10.73% 31.18% 45.20% 44.68% 48.08% 44.10% 7.56% 8.23% 5.92% 0.74% 0.00% 0.00% 0.00% 22.00% Controllable write-offs as % of Net Revenue Revenue 2,094,720 2,230,736 2,470,154 3,240,396 Uncontrollable write-offs 946,870 996,804 1,187,728 1,428,896 Net Revenue 1,147,850 1,233,932 1,282,426 1,811,500 Controllable write-offs 158,435 183,550 146,315 24,000 Controll. write-offs as % of Net Rev. 13.80% 14.88% 11.41% Draft Financial Statements Attached is a draft of the financial statements for the ambulance fund. These have not been audited yet so there is a chance they could change but we do not expect them to change significantly. The statement includes 6 years of history for comparison purposes. The adopted 2012 budget contained a net operating loss of $23,760 compared to an actual net income of $364,507 because call volume was approximately 29% higher than budgeted. Action Requested Adopt the resolution authorizing write-offs in the amount of $1,715,348. CITY OF COTTAGE GROVE, NIINNESOTA COMPARATNE SCHEDULE OF REVENUES, EXPENSES AND UNAUDITED CAANGES IN FUND NET ASSETS -DRAFT- COTTAGE GROVE EMS FUND For The Yeazs Ended December 31, 2012, 2011, 201Q 2009, 2008, and 2007 Operating revenues: Chazges for services Less: Mandatory write-offs Net chazges for services Otherrevenues Total operating revenues Operating expenses: Operating and maintenance: Personal services Commodities Contractual services Bad debt e7cpense Bad debt allowance Administrative and general: Other chazges- adminisfrative chazge Depreciation Total operating expenses Operating income (loss) Nonoperating revenues(expenses): Inveshnenteamings Loss on fixed asset Federal ('nazit Miscellaneous Total nonoperating revenues (eacpenses) Income (loss) before contributions and fransfers Capital contributions Transfer to General Fund Total transfers Change in net assets Net assets - 7anuary 1 Net assets - December 31 Year ended Budget December3l, 2012 2012 $2,492,600 $3,223,055 (1,242,100) (1,590,707) 1,25Q500 1,632,348 4,000 1,254,500 1,632,348 757,700 826,664 76,300 89,273 149,060 133,863 186,000 124,640 54,100 54,100 52,600 58,895 1,275,760 1,287,435 (21,260) 344,913 $2,300 $3,346 - 21,048 2,300 24,394 (18,960) 369,309 (4,800) (4,800) (4,800) (4,800) 364,507 1,001,861 $1,366,368 Yeaz ended Budget December 31, 2011 2011 $2,234,100 $2,451,450 (1,118,500) (1,16Q024) 1,115,600 1,291,426 4,000 3,952 1,119,600 1,295,378 743,845 759,068 67,800 78,299 139,460 123,373 15Q000 165,746 - 20,000 52,500 52,500 51,750 57,312 1,205,355 1,256,298 (85,755) 39,080 $2,300 $5,905 - (25,855) - 4,594 2,300 (15,356) (83,455) 23,724 - (3,600) - (3,600) 20,124 981,737 $1,OO1,861 Yeaz ended December 31, 2010 $2,228,646 (1,011,930) 1,216,716 1,216,716 724,406 81,288 121,742 185,163 7,000 52,500 52,389 1,224,488 (7,772) $4,221 32,107 12,293 48,621 4Q849 2,345 (7,609) (7,609) 35,585 946,152 $981,737 Yeaz ended December 31, 2009 $2,090,119 (905,547) 1,184,572 1,184,572 691,145 83,071 111,442 191,957 (15,000) 52,500 41,295 1,156,410 28,162 $5,872 107,578 15,755 129,205 157,367 157,367 788,785 $946,152 Yeaz ended December 31, 2008 $1,770,220 (657,417) 1,112,803 1,112,803 557,593 63,772 107,943 164,364 75,000 52,500 36,765 1,057,937 54,866 $12,194 70,381 7Q381 718,404 $788,785 Yeaz ended December 31, 2007 $1,S1Q934 (679,739) 1,131,195 1,131,195 591,789 62,111 99,540 122,106 45,000 52,500 37,368 1,O1Q414 120,781 $5,371 153,356 153,356 565,048 $718,404 RESOLUTION NO. 13- RESOLUTION AUTHORIZING WRITE-OFFS OF THE COTTAGE GROVE EMS ACCOUNTS RECEIVABLE IN THE AMOUNT OF $1,715,348 WHEREAS, certain ambulance bills are determined uncollectable NOW, THEREFORE BE IT RESOLVED, by the City Council of Cottage Grove, County of Washington, State of Minnesota, that $1,715,348 be written off the Cottage Grove EMS accounts. Passed this 20th day of March 2013. Myron Bailey, Mayor Attest: Caron M. Stransky, City Clerk